What does a company need to do in order to innovate? Most of the answers to this question tend to be based on cultural factors, such as Google’s famous eight pillars of innovation, McKinsey’s eight essentials, Slack’s four elements, and many, many others: issues ranging from the concept of a mission that justifies everything, to eliminating the stigma associated with failure, through concepts such as ambition, placing value on what the company does well, user focus, and others.
However, there is one issue that very few models cite, and which I see as absolutely crucial: managing information about the environment your business is working. Very little is said about this, mainly because in general, managers tend to read very little. In business schools, we get tired of telling our students that absorbing and processing information from the environment is fundamental, and we even make efforts to systematize tasks such as keeping up to date with what’s happening in their industry and reading the news, but in practice, managers tend to be very busy people, and so they rarely consider reading the news as an essential part of their work.
Needless to say, even fewer consider this continuous flow of information as part of an innovation process. On many occasions, I have lost faith in companies I worked with when I found that they were truly ignorant about what was going on in their industry, or worse, that they did not even know what their company was doing at the strategic level. They were so deeply engrossed in their department, their goals or their day-to-day business that they basically didn’t care about the environment. They were too busy to worry about it, and considered it somebody else’s responsibility, to the point that on more than a few occasions I knew more about their company’s strategies as an analyst than they did as managers.
The simple truth is that innovation is fed by ideas, and those ideas often come from the environment. Of course, the idea is not the only important thing: I completely agree with a recent article by Richard W. DeVaul, “Want innovation? Forget invention, learn to execute”, where he argues that innovation comes not so much from the idea or invention, as from execution. But in order to know where to apply that ability to execute, it is essential to know what is happening in the wider world; which factors are seen as most critical by the competition, which trends are emerging, and many others. I sincerely believe that the regular and systematized reading of information from within the environment greatly favors the development of a culture of innovation. In fact, it coincides with one of the fundamental ideas underlying Henry Chesbrough’s widely used open innovation model, which is to assume that the company can and should use external ideas as a way of advancing its own procedures and technologies.
If few managers are prepared to do much more than glancing through a newspaper, even fewer organizations understand the importance of their employees being well informed, of a culture that distributes news, that invites contributions or that promotes critical discussion. If the former, the individual element, is generally in short supply, the latter, its translation into corporate culture, is rare: few companies truly understand the importance of what I call radar. And if you don’t feed the idea machine with information from the environment, it can be very difficult to generate innovation. In some cases, there are people in the company who, due to the normal course of their work, which sometimes involves attending trade fairs, congresses and similar events, are more in touch with what the rest of the industry is doing, but this knowledge is not usually available to them.
The problem is that too many companies are so focused on the day-to-day, that they fall into the search for operational excellence based on one type of innovation, the incremental, over the other, the disruptive. The result, as I have commented on countless occasions, is isomorphism, the tendency to follow the lead set by the their normative environment because they lack other inputs, other ideas, examples or trends set by others, beyond the company’s own environment. In other words, “navel gazing”.
How to implement such a radar? First, by taking the time to read. Sure, we cannot spend all day poring over a newspaper, but we should spend some time every day learning about what’s going on in our industry, in our environment, and in industries that can provide interesting examples or that represent innovative trends. But this task is not strictly individual: we must create corporate repositories, make it possible for certain people to “specialize” in certain topics, seek comments; we need to dynamize information, and to have a conversation around these topics. Knowledge about the environment we’re working in has to distributed throughout the company, it can’t be the preserve of senior management and their advisors.
Does your company have anything that even minimally resembles this kind of radar? Does it generate innovation by feeding on what the competition is doing? Do you have the impression that this could be important, or that it could be a way of driving innovation? Give the matter some thought.